Acknowledgement

This report has been prepared and submitted as a requirement for PROJECT DEVELOPMENT Course. During the preparation of this report, I had to face several obstacles which were nevertheless removed through guidance by my course teacher I take this opportunity to thank my Beloved Teacher, Sir Rehan Ahmed for his ever-present guidance, support and ideas throughout the semester. There are a number of people who have assisted me and I appreciate their efforts in helping us, especially my family and friends who were extremely helpful, supportive and patient through the entire process gathering the required data and completing the report. All the material which I included in this report is based on data/information gathered from various sources and is based on certain assumptions. Although, due care and diligence has been taken to compile this report but the contained information may vary due to any change in any of the concerned factors, and the actual results may differ substantially from the presented information. Once again I would like to take this opportunity to thank everyone, without which i would never have been able to complete my project.

S.No 1. 2. 3.

4. 5. 6. 7. 8.

9.

10. 11. 12.

TABLE OF CONTENT Introduction and Background Vision and Mission Market Analysis Gap Availability Marketing Strategy Market Research Demand of Solar Geyser SWOT Analysis Competitors Price Strategy Particulars of Project Product Details Design Working Capacity Technical Analysis Human Resource Location and Site Technical Information Machinery and Equipment Raw Materials and Accessories Financial Analysis Project Cost Fixed and Variable cost Estimated Sales Salary Chart Loan Amortization Table WACC Insurance Expense Depreciation Table Projected Cash flow Net Present Value Pay Back Period Internal Rate of Return Income Statement Conclusion Questionnaire FAQs References
2

Page No. 3-4 5 6-7

8 9 10 11 12-15

16-18

19-24 25-29 29-43

13. 14. 15. 16.

44 45 46-47 48

Natural and propane gas prices have double and tripled over the last year. Electricity rates are already on its peak & expected to raise more. You may not be able to beat the high prices of gasoline. But you can sure outwit the gas and electrical companies. Solar radiation is a free, clean and inexhaustible source of energy. In a split second the sun radiates more energy than was converted and stored by plants in fossil fuel over millions of years. Solar radiation is radiant energy emitted by the sun, particularly electromagnetic energy. Basically it means how much sun-light shining down on us. The initial cost of installing solar panels or other sources of solar energy is high, and that is not easy for most people to get around. No matter how much some people would like to get involved in the movement to independent energy, it is cost prohibitive. To achieve the highest level of efficiency, which is the entire point of going solar in the first place, you need the proper amount of secure space to support the panels. Not only how much space is available, but also the location is also relevant to whether or not you can maintain solar energy. Some locations simply do not receive enough sunlight to produce substantial energy. Applications other than electricity production such as solar water heaters and solar cookers also have vast applications. Solar energy can be harnessed to provide irrigation by using solar water pumping station. All this will help in both reducing the import of fossil fuels and dependency of people on fuel wood As of 2007, the total installed capacity of solar hot water systems is approximately 154 GW China is the world leader in their deployment with 70 GW installed as of 2006 and a long term goal of 210 GW by 2020. Israel and Cyprus are the per capita leaders in the use of solar hot water systems with over 90% of homes using them. In the United States, Canada and Australia heating swimming pools is the dominant application of solar hot water with an installed capacity of 18 GW as of 2005. (Wikipedia)

Solar Geyser trend is growing day by day. There are many companies in Pakistan who are manufacturing and producing solar geysers. Demand of solar geyser is increasing in every part of country because people mostly like to save money, as electricity and gas rates are going higher day by day. New solar hot water installations during 2007, worldwide.

Features of Solar Geyser Availability of free hot water 24 hrs a day. Designed to heat water to 60oC, even in cold climates. Save upto 80% of Domestic Gas bills in the winter season. Environment friendly. 20 year life time expectancy. Absolutely no maintenance. Quick pay back period Geographical Advantage The Climate and suitable weather conditions in Pakistan are ideal for Solar Energy use. To overcome energy shortage, Pakistan needs to develop its indigenous energy resources like hydropower, solar and wind. Pakistan lies in an area of one of the highest solar insulation in the world. This vast potential can be exploited to produce electricity, which could be provided to off-grid communities in the northern hilly areas and the southern and western deserts.
4

VISION:

To be a respected and leading Solar Energy Company in Pakistan

MISSION:

Want a big share of the geyser industry in Pakistan. Our goal is to bring this renewable energy at your doorstep. We believe that with the help of solar energy technology we will bring positive change in the geyser industry of Pakistan.

Pakistan is an energy deficient country, where a large fraction of the population still does not have access to modern day energy services such as electricity. This is due to very limited fossil fuel resources and poor economy, which restrains the import of fossil fuels on a large scale. Due to rising demand and a failing power infrastructure severe electricity & Gas shortages have occurred in Pakistan. This has led to widespread rolling blackouts that have paralyzed industry and led to protests and rioting. To overcome energy shortage, Pakistan needs to develop its indigenous energy resources like hydropower, solar and wind. Pakistan lies in an area of one of the highest solar insulation in the world. This vast potential can be exploited to produce electricity, which could be provided to off-grid communities in the northern hilly areas and the southern and western deserts. Consumption trend shows that the solar geyser has endless demand as they are now become the basic necessity for final consumers therefore the future for the solar geyser will definitely be there. Competition environment will not affect a lot because same business there but not located at our selected area. Customer behavior and demographics analysis provides good results for our project. Gap Availability: Solar geyser are available in many areas of Pakistan but mostly in the province of Punjab, there is a need of solar geyser in a big and metro city like Karachi, which cover large area of population. In Karachi North Nazimabad and nearly located areas, there are no solar geysers outlets; other areas which cover North Nazimabad like Gulberg, Liaquatabad and F.B. Area also have no solar geyser outlet.

Marketing Strategy:
They all are offering Solar Geyser but unable to attract market Thats why we will emphasis on promotion and make our distribution system effective Broacher will be distributed door to door An advertisement is in progress which will be shown on National TV channels & cables Poster & sticker plus hording Boards will be shown on their places

Market Research
This is probably the most critical factor for running a successful business. We need to visit solar geyser outlets, franchises and other stores to see how our concept would fit into the neighborhood we are planning to target. Talk to customers to know their preferences, some detailed meetings with outlet managers / owners over dinner would do the trick in obtaining best practices and critical information that otherwise could have been overlooked.

Demand of Solar Geyser

In Nazimabad and nearly located areas there is a need of solar geyser outlet because there is no outlet or shop of solar geyser in Karachi except clifton . We will capture the area of North Nazimabad which is approximately shown 750000 pop in 2009. The population of Gulberg town is about 500000. New Karachi town involve in covering approximately 700000 numbers of population, as well as the population of Liaquatabad town and F.B.area covers huge population which is increasing day by day. These thickly populated areas will be sufficient for providing a gap to us and the probability of availability of consumers is very high.

Strength
Latest Technology Employees Expertise Committed to Health and Safety of its employees and preservation of environment. Committed towards community development in the areas where operate Save electricity & Gas Economical Innovative

Weakness
Lack of awareness so peoples are unaware of the technology and product Hesitate to accept change Risk of New Business Dependence on foreign manufacturer

Opportunities
Not a huge Competition Growing literacy rate Un touched Available Huge market ROI is good ,so soon it will be a profitable business Peoples are sick off utility bills its provide relief

Threats
Pakistan is not a stable country political nor economically so it can effect our business in a bad way Poverty level is high in Pakistan Every one cant be made a target market Limited market

1. Electric and Gas Geysers

In Pakistan almost 22% to 24% people are using geyser either in the shape of electric or gas geyser so it means almost 30 to 40 million people are using geyser These electric and gas geysers are of different price ranging from PKR 20,000 to 40,000 There are lots of local manufacturers and some of them are as follows: Name Singer Pakistan Limited Super Asia Address Plot # 39, Sector # 19, Korangi Industrial Area, Karachi Saddiqe Godom, Near National Bank, City Station, Karachi

2. Solar Geysers
Name Adaptive Technologies Sun Techniques Address Suit#3,4 Floor, Dean Arcade, Block 8,Clifton Karachi B-25, Tatari Villas, Bath Island , Karachi
th

Competitors Prices
Persons 2 Persons 3 Persons 4 Persons 6 Persons Liters 100 Liters 150 Liters 200 Liters 280 Liters Price p/unit PKR 18000/= PKR 28000/= PKR 35000/= PKR 40000/=

Persons 2 Persons 3 Persons 4 Persons 6 Persons

Liters 100 Liters 150 Liters 200 Liters 280 Liters

Price p/unit PKR 25000/= PKR 32000/= PKR 38000/= PKR 45000/=

How long will it take to recoup my investment?

Solar Geysers are much more affordable than many other solar hot water heaters. For a household of 4, the price of a full system may not be too much more than a new electric or gas boosted geysers. Depending on your location (solar levels) and current hot water usage the annual electricity or gas saving will differ. However in a normal household that spends 35% of its electricity bill on hot water heating, the full cost of the purchase may be recouped as quickly as 3-4 years in reduced bills. You will definitely make considerable savings during the life of the Solar Geyser.

10

S.No 1. 2. 3. 4. 5. 6. 7. 8.

Particulars Proposed Project Promoters Operators Location Area Current Practice Technical experts Human Resources

Description Solar Geyser Owner Manager North Nazimabad 3500 sq yard for Building A huge market is available for consumer goods Available Easily Available

11

DESIGN OF THE PRODUCT:

Using great new technology we can now convert solar radiation efficiently into a usable from of energy that heat water which we can use in our homes, factories and offices. The key is our new actuated glass tube. In Pakistan, thermal plants are using oil, natural gas, and coal account for about 70 percent of this capacity, with hydroelectricity (hydro) making up 28 percent and nuclear 2.5 percent. Pakistan's total power generating capacity has increased rapidly in recent years. Pakistan often faces short fall of electricity in peak seasons. Rotating load shedding are, however, still necessary in most areas. This shortage will be met through alternate energy sources like solar, wind and biomass. Solar hot water (solar geysers) is made up of vacuum tube, frame, storage tank, silicon seal, and relational component

12

13

WORKING OF SOLAR GEYSER:

Solar geyser relies on warm water rising, a phenomenon known as natural convection, to circulate water through the evacuated glass tube collector and to the tank. Hot water storage tank is located above the absorber evacuated glass tubes as shown in. As water in the absorber heats, it becomes lighter and naturally rises into the tank above. Meanwhile, cooler water in the tank flows downwards into the absorber, thus causing circulation throughout the system.

14

CAPICITY OF SOLAR GEYSER: Persons 2 Persons 3 Persons 4 Persons 6 Persons Liters 100 Liters 150 Liters 200 Liters 280 Liters Square Meter 2.0m sq panel 2.6m sq panel 2.9m/3.6m sq panel 2*2.0m sq panel

HUMAN RESOURCE
15

Human resources like managers, supervisors, inventory keeper, workers are easily available in this scenario and but there is no need of further training of staff. The world is become technical and super power, through this skills and abilities can be seeing. Human resource prefers that how employees are managed by organizations or to the personnel department. Every organization needs skillful employees who work for the organization effectively and efficiently and also leads through success and development. An owner and a manager should be the governing body of a company. A manager of the company should possess of the followings skills Entrepreneurial, capable of mobilizing financial and human resources Should possess an excellent managerial skills

Below the manager we are propose the following key staff for the company Supervisor Salesman Accountant Technical Expert Below the supervisor we propose the following staff for the company Receptionist Inventory keeper Machine workers Security Guard

Hiring Employees
In order to get and retain qualified employees, we must make sure our pay scales relate clearly to the job's duties and responsibilities. In addition, we need to find out what other business are paying their employees so that we can be competitive in the job market, without spending too much on payroll.

16

Selection of Area
Our outlet setup will be in a densely populated middle income area such as North Nazimabad, the main reason for selecting this location is the presence of target market and customer traffic which are the prerequisites for our success and on the back side of outlet we will manufacture the product.

Area Selected for factory and outlet

North Nazimabad, Karachi Address: North Nazimabad block J E59, near Imam Clinic, 5 Star Chowrangi, Karachi.

Area Required
3500 sq yard for building

TECHNICAL INFORMATION OF THE SOLAR WATER HEATER

17

1. SOLAR TANK PRODUCING MACHINE

18

Product Description
Solar water heater production equipments - seam welding machine Power: 50kVA/35kVA voltage: 380V/220V. Machinery Characteristics: 1. There are two standard models: Transversal Seam Welding Model and Longitudinal Seam Welding Model. 2. Also one machine can be used as both transversal seam welding and longitudinal seam welding, only need to change the direction of upper seam wheel head and change the lower welding head and welding arm within minutes. 3. Driven one head and free the other head. The two seam wheels have the same tangential speed. 4. Widely used in hardware, appliances, automotive, manufacturing pots, can, fuel tank, tank producing and other metal manufacturing and processing industries.
Model Power Mains voltage Welding thickness Arm body size Weight FN-100 100KVA 380V 0.6+0.6mm 1800mm 680kg

19

2. High Temperature Sputtering and Coating Production Line of Vacuum Tube

Product Description Introduce the sputtering coating process to the mirror making industry. Use the advanced sputtering process to get harder and high reflectivity mirror; many metals could be selected as the coating material, aluminum, titanium, silver, copper and chrome. With various coating parameters, vary color could be achieved on clear glass. The sputtering gives mirror higher reflective, hard coating and more power stick on glass. With the chrome or chrome-nickel coating, the mirror provides the self-anti-corrosive property, and then the back painting is not necessary. The machine is very good for home mirror, chrome mirror, double side mirror, light reflective glass and colorful glass beads.

20

3. Automatic Welding Machine

Product Description
Full set of equipments, in total 2 sets, divided into flat plate welder and arc plat welder, the machines are used in supermarket of escalator pedal and arc plat welding. high precision, weld spot fastness, and can be set 10 sets of welding standard, each welding standard can execute 100 steps, simple operation, high efficiency. PLC +control screen + MCU control, simple operation, just need install the work piece, full automatic welding, Welding length 1500mm.

21

4. EQUIPMENT FOR VACCUM TUBE a. Imported Electrical Equipment Test Device

b. Vacuum Exhaust Workshop

22

c.

Evacuating the Air from Tube

5. EQUIPMENT FOR TANK

a.

Equipment machine for solar tank

23

b.

Welding machine for inner Tank

c.

Welding machine for inner Tank

24

1.

Evacuated Solar Collector Tubes

Dimension Material of Tube Glass Expansion Ratio Outer Diameter of Tube Inner Diameter of Tube Thickness of Glass Transmittance Length of Tube Selective Coating Absorptivity Emissivity Vacuum Degree Collecting Performance Parameter under Sunshine Hailstone Resistance

47-1500 3.3 High Boron Silicon 330.110-6K-1 470.1 370.1 1.60.1 0.89 15000.5 AL-N/AL or SS-CU- AL-N/AL 0.86(AM1.5) 0.080(805) 5.010-3Pa 190m2/kw 25mm

58-1800 3.3 High Boron Silicon 330.110-6K-1 580.1 470.1 1.60.1 0.89 18000.5 AL-N/AL or SS-CU- AL-N/AL 0.86(AM1.5) 0.080(805) 5.010-3Pa 190m2/kw 25mm

25

2. Solar water heater stand

Suitable for low pressure and high pressure solar water heater Material: 1.2mm 1.4mm 1.5mm 1.8mm 3. Angle: 20-45degree

3.

Pressure Relief Valve

Pressure Relief Valve is used for relief the high pressure in the pressurized system when the pressure is very high. It opens.

4.

Pressure Gauge

Pressure Gauge is used for detecting the pressure in the pressurized system

5.

Expansion Pack

Expansion Pack composes of Controller, Circulation Pump and expansion tank.

Controller: control the sensors in the tank and the manifold collector, and the electric heater. Circulation Pump: helps the water flow quickly, circulates the heat exchange in the whole system. Expansion Tank: help to reduce the pressure when the pressure is high in the pressure system. And add pressure when the pressure in the system is low.
26

6. Magnesium bar
Magnesium bar is used to prevent the inner tank from rusting while it sacrifices itself.

7. Electric heater

Electric heater is to help heat water, when there are consecutive rainy days.

8. Controller

Controller is to run system automatically, and to show temperature

9. Assistant tank

Assistant tank is to input water into water tank automatically.

10. Antifreeze

27

Antifreeze is for separated solar water heater system .It can prevent congealing the pipeline.

11. Solar Water Heater Tube Holder

1) Diameter: 47mm, 58mm, 70mm. 2) Material: High grade silicone. 3) Guards against water leakage. 4) Used for solar water heater Material. UV Stabilized Silicone Rubber

12. Solar tank cover

Solar energy tank cover with different material, color, size, thickness and design according to requirement

13. Solar Water Heater Tube Seal

1) Diameter: 47mm, 58mm and 70mm 2) Material: High grade silicone 3) Guards against water leakage 4) Used for solar water heater material. UV Stabilized Silicone Rubber

14. Nuts and bolts

28

15. Solar tank lid

29

PROJECT COST

S.NO 1. 2. 3. 4. 5. 6.

PARTICULARS Land Building Construction Machinery & Equipment Security Camera & Computer Generator Truck Total

QTY 1 1 10 5/1 1 1

PRICE 50,000,000 30,000,000

TOTAL 50,000,000 30,000,000 12,470,000

SALAVAGE VALUE 750,000 1,247,000 25,000 10,000 140,000 2,172,000

100,000 1,400,000

250,000 100,000 1,400,000 94,220,000

Reference:
Land and Building Rate: Al-Hadi State Agency Machinery and Equipment Rate: Ali Baba Global Traders Security Cameras, Computer & Generator Rate: Naveed Technologies Truck Rate: Danish Motors

FIXED COST
S.No Description 30 Per Year Per Quarter

1 2 3 4 5 6 7 8 9

Insurance Salary Utilities Total (1+2+3) Total Depreciation Sub Total (4+5) Interest Loan Payable Grand Total (6+7+8)

1,037,088 6,708,000 1,800,000 9,545,088 1,305,390 10,850,478 8,000,000 2,345,054 21,195,532

0 1,677,000 450,000 2,127,000 326,347 2,453,347 0 0 2,453,347

VARIABLE COST
S.No 1 2 3 4 5 Description Maintenance Cost Transportation Sub Total (1+2) Inventory Total (3+4) Per Year 240000 1200000 1440000 364299732 365739732 Per Quarter 60000 300000 360000 91074933 91434933

ESTIMATED SALES (yearly)

31

No. of targeted families = 100,000 Expected No. of families to purchase = 10,000 Purchasing at least by each family = 35,000 Total Sales (yearly) = 350,000,000

SALARY CHART

32

S.No 1 2 3 4 5 6 7 8 9 10

Human Resources Manager Supervisor Accountant Technical Expert Salesman Inventory Keeper Machine Operator Receptionist Security Guards Sweepers Total

No. Of Workers 1 1 2 6 2 2 25 1 2 2

Salary (Rs) 50,000 30,000 20,000 25,000 15,000 10,000 8,000 15,000 6,000 6,000

Total (RS) 50,000 30,000 40,000 150,000 30,000 20,000 200,000 15,000 12,000 12,000 559,000

Per Year (Rs) 600,000 360,000 480,000 1,800,000 360,000 240,000 2,400,000 180,000 144,000 144,000 6,708,000

Salary Expense of 10 years Quarterly and Yearly

1st Year 2nd Year 3rd Year 4th Year 5th Year 6ht Year 7th Year 8th Year 9th Year 10th Year Total

Per Quarter 1,677,000 1,677,000 1,677,000 1,760,850 1,760,850 1,760,850 1,848,892 1,848,892 1,848,892 1,941,337 28437920

Per Year 6,708,000 6,708,000 6,708,000 7,043,400 7,043,400 7,043,400 7,395,570 7,395,570 7,395,570 7,765,348 113,751,680

Assumption 5% Increase in salary after every 3 year

LOAN AMORTIZATION TABLE

Year Loan Amount Installment 33 Interest Principle Balance

1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th Total

50,000,000 47,654,946 44,934,683 41,779,178 38,118,793 33,872,745 28,947,330 23,233,849 16,606,211 8,918,150

10,345,054.15 10,345,054.15 10,345,054.15 10,345,054.15 10,345,054.15 10,345,054.15 10,345,054.15 10,345,054.15 10,345,054.15 10,345,054.15 103,450,541.50

8,000,000 7,624,791 7,189,549 6,684,669 6,099,007 5,419,639 4,631,573 3,717,416 2,656,994 1,426,904 53,450,542

2,345,054 2,720,263 3,155,505 3,660,386 4,246,047 4,925,415 5,713,481 6,627,638 7,688,060 8,918,150 50,000,000

47,654,946 44,934,683 41,779,178 38,118,793 33,872,745 28,947,330 23,233,849 16,606,211 8,918,150 0

1st Year Loan

10,345,054

($10,345,054.15) Financial Formula

Reference Interest rate given by Habib Bank Dated: 13.04.2012.

Weighted Average Cost of Capital (WACC)

34

Equity Debt Assets Tax Cost of Equity(Ks) Cost of Debt(Kd)

100,000,000 50,000,000 150,000,000 25% 22% 16%

WACC= {(E/A) (Cost of Equity)} + {(D/A) (Cost of Debt) (1-Tax)} WACC= (0.66667X0.22) + (0.33333X0.16X0.75) WACC=0.14666+0.03799 WACC=0.18465 WACC=18.46% Ks=Bond yield + Risk premium Bond yield = 17% Risk premium = 5% Ks=22% Assumption: 5% Risk added in cost of equity

INSURANCE EXPENSE
Item
Fire Insurance Building Security Computers 35 30,000,000 250,000

Cost

Premium Amount

Machinery & Equipment

Generator Truck Total Fire Insurance Clause A & C F.I.F C.E.D

12,470,000 100,000 1,400,000 44,220,000

Rs. 20 Per Thousand

5% or Maxim 2000 TOTAL 1% of Total 16% of Total Chargeable Premium

884,400 2000 886,400 8864 141,824 1,037,088

Insurance Expense 1st Year 2nd Year 3rd Year 4th Year 5th Year 6ht Year 7th Year 8th Year 9th Year 10th Year Total

In Rs. 1,037,088 1,037,088 1,037,088 1,088,942 1,088,942 1,088,942 1,143,389 1,143,389 1,143,389 1,200,558 11,008,815

Reference By Adamjee Insurance Company I.I Chundrigar Road Karachi

Depreciation Table
S. No

Asset

Cost

Salvage Value

Life of

Dep Exp 1st Year

Total Dep Exp of 10

Book Value

36

Asset
1 2 3 4 5 6 Land Building Machinery Computer, camera Truck Generator Total 50,000,000 30,000,000 12,740,000 250,000 1,400,000 100,000 94,225,000 0 750,000 1,274,000 25,000 140,000 10,000 2,172,000 40 40 25 10 15 10 0 731,250 458,640 22,500 84,000 9,000 1,305,390

Year
0 7,312,500 4,586,400 225,000 840,000 90,000 13,053,900 50,000,000 22,687,500 7,886,600 25,000 560,000 10,000 81,169,100

Depreciation Expense
Per Year 1,305,390 1,279,822 1,254,236 1,229,151 1,204,568 1,180,476 1,156,866 1,133,728 1,111,053 1,088,831 11,944,121 Per Quarter 326,347 319,955 313,559 307,287 301,142 295,119 289,216 283,432 277,763 272,207 2,986,027

1st Year 2nd Year 3rd Year 4th Year 5th Year 6ht Year 7th Year 8th Year 9th Year 10th Year Total

Projected Cash Flow for 10 Years

1st Year 2nd 3rd 4th 5th Fixed Cost Investment

94,220,000

37

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Working Capital Inventory Sales Total Revenue (3) C.O.G.S ( Inventory Cost) Insurance Transportation Utilities Salaries All Cost ( 5+6+7+8+9 ) Operating Profit ( 4-10 ) Deprecation Profit before tax (11-12 ) Tax 25% Profit after tax (13-14 ) Net Salvage value (Assets) Working Capital Recovery Initial Out Lay ( 1+2 ) Operating cash flow (12+15 ) Terminal Cash inflow ( 16+17 ) Net Cash flow (19+20 ) Book Value of Investment

55,780,000 350,000,000 350,000,000 309,656,951 1,037,088 1,200,000 1,800,000 6,708,000 320,402,039 29,597,961 1,305,390 28,292,571 7,073,143 21,219,428 367,000,000 367,000,000 325,139,798 1,037,088 1,200,000 1,800,000 6,708,000 335,884,886 31,521,374 1,279,822 30,241,552 7,560,388 22,681,164 385,875,000 385,875,000 341,396,788 1,037,088 1,200,000 1,800,000 6,708,000 352,141,876 33,537,958 1,254,236 32,283,722 8,070,930 24,212,792 405,168,750 405,168,750 358,466,627 1,088,942 1,260,000 1,890,000 7,043,400 369,748,969 39,231,261 1,229,151 38,002,110 9,500,527 28,501,583 425,427,187 425,427,187 376,389,959 1,088,942 1,260,000 1,890,000 7,043,400 387,672,301 45,835,734 1,204,568 44,631,166 11,157,791 33,473,375

150,000,000 22,524,818 23,960,986 25,467,028 29,730,734 34,677,943

150,000,000

22,524,818

23,960,986

25,467,028

29,730,734

34,677,943

150,000,000

148,694,610

147,414,788

146,160,552

144,931,401

143,726,833

6th

7th

8th

9th

10th

1 2 3 4 5

Fixed Cost Investment Working Capital Inventory Sales Total Revenue C.O.G.S ( Inventory Cost) 446,698,546 446,698,546 385,759,457 469,033,473 469,033,473 405,047,429 492,485,147 492,485,147 425,299,801 517,109,404 517,109,404 446,564,791 542,964,875 542,964,875 468,893,030

38

6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Insurance Transportation Utilities Salaries All Cost ( 5+6+7+8+9 ) Operating Profit ( 4-10 ) Deprecation Profit before tax (11-12 ) Tax 25% Profit after tax (13-14 ) Net Salvage value (Assets) Working Capital Recovery Initial Out Lay ( 1+2 ) Operating cash flow (12+15 ) Terminal Cash inflow ( 16+17 ) Net Cash flow ( 19+20 )

1,088,942 1,260,000 1,890,000 7,043,400 397,041,799 49,656,747 1,180,476 48,476,271 12,119,067 36,357,204

1,143,389 1,323,000 1,984,500 7,395,570 416,893,888 52,139,585 1,156,866 50,982,719 12,745,680 38,237,039

1,143,389 1,323,000 1,984,500 7,395,570 437,146,260 55,338,887 1,133,728 54,205,159 13,551,289 40,653,870

1,143,389 1,323,000 1,984,500 7,395,570 458,411,250 58,698,154 1,111,053 57,587,101 14,396,775 43,190,326

1,200,558 1,389,150 2,083,725 7,765,348 481,331,811 61,633,064 1,088,831 60,544,233 15,136,058 45,408,175 81,169,100 55,780,000

37,537,680

39,393,905

41,787,598

44,301,379

46,497,006 136,949,100

37,537,680

39,393,905

41,787,598

44,301,379

183,446,106

22

Book Value of Investment

142,546,357

141,389,491

140,255,763

139,144,710

138,055,879

Assumptions:
The Sales are expected to increase by 5% every year and while the cost of raw materials is assumed to increase by 5%. Life of Project 10 year Principles followed in estimation o Separation Principle o Consistency Principle o Post tax Principle

Net Present Value (NPV)

Year
0 1 2

Cash Flows
-150000000 22,524,818 23,960,986 / ( 1.1846 )^1 / ( 1.1864)^2 22,524,818 23,960,986 / / 1.1846 1.4075 = =

PV
19,014,703 17,023,791

39

3 4 5 6 7 8 9 10

25,467,028 29,730,734 34,677,943 37,537,680 39,393,905 41,787,598 44,301,379 183,446,106

/ ( 1.1846 )^3 / ( 1.1846 )^4 / ( 1.1846 )^5 / ( 1.1846 )^6 / ( 1.1846 )^7 / ( 1.1846 )^8 / ( 1.1846 )^9 / ( 1.1846 )^10

25,467,028 29,730,734 34,677,943 37,537,680 39,393,905 41,787,598 44,301,379 183,446,106

/ / / / / / / /

1.6623 1.9692 2.3327 2.7633 3.2734 3.8777 4.5935 5.4415

= = = = = = = =

15,320,356 15,146,331 14,866,010 13,584,366 12,034,291 10,776,387 9,644,362 33,712,414

161,123,011

NPV = Present value of In Flow - Present Value of Out Flows NPV = NPV = 161,123,011 11,123,011 150,000,000

Pay Back Period

YEAR 0 1 2 3 4 CASHFLOWS -150,000,000 22,524,818 23,960,986 25,467,028 29,730,734

COST
150,000,000 127,475,182 103,514,196 78,047,168

RECOVERED
22,524,818 23,960,986 25,467,028 29,730,734

BALANCE
127,475,182 103,514,196 78,047,168 48,316,434

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5 6 7 8 9 10

34,677,943 37,537,680 39,393,905 41,787,598 44,301,379 183,446,106

48,316,434 13,638,491

34,677,943 37,537,680

13,638,491 -23,899,189

Pay Back Period = Pay Back Period = Pay Back Period = Pay Back Period =

Year before full recovery + Unrecovered amount / Cash flow of the Year 5 + 5 13,638,491 + 5.36333 0.36333 / 37,537,680

Pay Back Period =

5 Year 4 Month

Internal Rate of Return (IRR)

GUESS=20.3%
Year
0 1 2 3 4 5

Cash Flows
-150000000 22,524,818 23,960,986 25,467,028 29,730,734 34,677,943 /( 1+R)^1 /( 1+R )^2 /( 1+R )^3 /( 1+R )^4 /( 1+R )^5 22,524,818 23,960,986 25,467,028 29,730,734 34,677,943 / / / / /

Rate
1.23 1.5129 1.8609 2.2888 2.8153 = = = = =

PV
18,312,860 15,744,126 13,685,328 14,237,738 12,317,672

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6 7 8 9 10

37,537,680 39,393,905 41,787,598 44,301,379 183,446,106

/( 1+R )^6 /( 1+R )^7 /( 1+R )^8 /( 1+R )^9 /( 1+R)^10

37,537,680 39,393,905 41,787,598 44,301,379 183,446,106

/ / / / /

3.4628 4.2529 5.2389 6.4438 7.9259

= = = = =

10,840,267 9,262,833 7,976,407 6,875,039 23,145,145 (17,602,584)

IRR = 18.46 + [NPV (18.46%) / NPV (18.46%)-NPV (20.3%)] 20.3-18.46 IRR= 18.46+ [0.387216] X1.84

IRR= 19.18

Income Statement
1st Year 1 2 3 4 5 Inventory Sales C.O.G.S ( Inventory Cost) Contribution Margin (1-2) Insurance Transportation 350,000,000 309,656,951 40,343,049 1,037,088 1,200,000 2nd 367,000,000 325,139,798 41,860,202 1,037,088 1,200,000 3rd 385,875,000 341,396,788 44,478,212 1,037,088 1,200,000 4th 405,168,750 358,466,627 46,702,123 1,088,942 1,260,000 5th 425,427,187 376,389,959 49,037,228 1,088,942 1,260,000

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6 7 8 9 10 11 12 13

Utilities Salaries All Cost ( 4+5+6+7 ) Operating Profit (3-8 ) Deprecation Profit before tax (9-10 ) Tax 25% Profit after tax (11-12 )

1,800,000 6,708,000 10,745,088 29,597,961 1,305,390 28,292,571 7,073,142 21,219,428

1,800,000 6,708,000 10,745,088 31,115,114 1,279,822 29,835,292 7,458,823 22,376,469

1,800,000 6,708,000 10,745,088 33,733,124 1,254,236 32,478,888 8,119,722 24,359,166

1,890,000 7,043,400 11,282,342 35,419,781 1,229,151 34,190,630 8,547,657 25,642,927

1,890,000 7,043,400 11,282,342 37,754,886 1,204,568 36,550,318 9,137,579 27,412,739

6th 1 2 3 4 5 6 7 8 9 10 11 12 13 Inventory Sales C.O.G.S ( Inventory Cost) Contribution Margin (1-2) Insurance Transportation Utilities Salaries All Cost ( 4+5+6+7 ) Operating Profit ( 3-8 ) Deprecation Profit before tax (9-10 ) Tax 25% Profit after tax (11-12 ) 446,698,546 385,759,457 60,939,089 1,088,942 1,260,000 1,890,000 7,043,400 11,282,342 49,656,747 1,180,476 48,476,271 12,119,067 36,357,203

7th 469,033,473 405,047,429 63,986,044 1,143,389 1,323,000 1,984,500 7,395,570 12,386,459 51,599,585 1,156,866 50,442,719 12,610,679 37,832,039

8th 492,485,147 425,299,801 67,185,346 1,143,389 1,323,000 1,984,500 7,395,570 12,386,459 54,798,887 1,133,728 53,665,159 13,416,289 40,248,869

9th 517,109,404 446,564,791 70,544,613 1,143,389 1,323,000 1,984,500 7,395,570 12,386,459 58,158,154 1,111,053 57,047,101 14,261,775 42,785,325

10th 542,964,875 468,893,030 74,071,845 1,200,558 1,38,9150 2,083,725 7,765,348 12,438,781 61,633,064 1,088,831 60,544,233 15,136,058 45,408,174

CONCLUSION
Manufacturing of solar geyser is characterized by uniqueness and novelty. Being pioneer, manufacturers have very bright potential for gaining huge market share. Rising winter temperature and energy crisis make the chances for the success of the proposal very imminent. An extensive and through deliberation has been given to financial aspect of the proposal underscoring the financial
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viability of the proposal. Therefore this proposal worth acceptance and must be acquired.

Phone: ____________________ Email id: _____________________________ Contact number: _________________________________________________ Sex: Male / Female _______________Date of Birth: ___________________ Q1.How long have you been using solar geyser? ________________________________________________________________ Q2.Where did you hear about the solar geyser? _______________________________________________________________ Q3.Which of the following influenced your purchase decision? a) Quality b) Quantity
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c) Features d) Other Please mention reason if option (d) ________________________________________________________________ Q4.Please mention the strengths of solar geyser ________________________________________________________________ Q5.Please mention the weakness/drawbacks of solar geyser (if any) ________________________________________________________________ Q6.How positive or negative has your experience with the product been? Please rate on a scale of 1 to 10 (1 being extremely positive, 10 being extremely negative) ________________________________________________________________ Q7.Did you purchase any similar products before? Please mention the similarities ________________________________________________________________ Q8.How satisfied is you with your overall purchase decision? Please mention the reason for your choice. a) Very satisfied b) Neutral c) Not satisfied Q9.Are there any comments you would like to give regarding the product or its specifications? ________________________________________________________________

FAQS
Q1. Is solar geyser a viable alternative to gas or electricity?
Yes, solar geyser system is an alternative to gas or electricity boosted

geysers in the some areas of Pakistan. Averaged over a year, a correctly sized solar geyser system can provide 80% to 100% of a household's hot water needs. . The hot water system can easily be automated with the natural gas boosted or electric geyser so hot water is guaranteed regardless of sunlight levels.
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Q2. Can solar geyser be use in cold conditions? Yes, solar geyser can be used in temperatures as low as -10 c, although performance is reduced in such extreme conditions but good heat output is still achieved in mild sub-zero conditions as long as there is sunlight. Q3. Will water be heated on a cloudy day? Yes. Although the heat output of the solar collector is reduced on overcast days it will still be able to provide heating. If it is a heavily clouded day or raining, then more gas or electric boosting may be required to maintain water at the required temperature. This system will be automated with the existing natural gas boosted geyser or electric geyser, so you don't have to worry about running out of hot water on a rainy day. Q4. Are evacuated glass tubes affected by frost? No. The solar geyser has been tested to minus 10 c and works extremely efficiently in cold climates. Q5. Can i use solar geyser with my existing geyser (hot water system)?
Normally yes. Simple retrofit valves can often be used to allow solar

geyser to connect to your existing geyser; the hot water system can easily be automated so hot water is guaranteed regardless of sunlight levels.

Q6. How can i be sure of the quality and performance of your products? The range of solar geysers meet the rigorous tests set by the relevant industry standards and are made from the high quality components backed by generous warranties. At the end of the day, the quality and reliability of our products and the service we provide as a customer is best demonstrated by our customers. Q7. What maintenance of the solar geyser is required? Under normal circumstances no maintenance of the system is required. Due to the shape of the tubes regular rainfall and wind should keep the
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tubes clean. Should a tube even be broken it should be replaced. This, however, is an inexpensive and easy job. Any "handy" person can install a new tube. Q8. Will the solar geyser be a fire hazard during hot, dry weather? No. The solar geyser's components are all high temperature rated and non-flammable so even during strong sunlight, the system will not catch a light or give off any sparks. The majority of the solar geyser's components are stainless steel, aluminum and glass. Q9. Can solar geyser be used for a large scale hot water production? Yes. Solar geyser can be connected in series or parallel to provide large scale hot water production for a commercial setting such as a school, hotel or office building. There is really no limit to the size of the system, however collectors must be installed in banks of no more than 150 tubes (in series), otherwise the water may boil

Q10. How does using solar help the environment? Using solar and other forms of renewable energy reduces reliance on fossil fuels for energy production, thus directly reducing co2 emissions. Co2 emissions contribute to global warming, an environmental issue which is now of great concern. The average household can reduce co2 emissions by as much as 20% by installing a solar geyser system.

REFRENCES
http://www.enercon.gov.pk/index.php? option=com_content&view=article&id=36&Itemid=16 http://en.wikipedia.org/wiki/Solar_water_heating http://www.google.com.pk/search? tbm=isch&hl=en&source=hp&biw=1152&bih=773&q=solar+geyser&gbv=2&oq=solar +geyser&aq=f&aqi=g5g-S5&aql=&gs_sm=12&gs_upl=1247l5060l0l7063l12l12l0l http://en.wikipedia.org/wiki/Solar_energy 47

http://www.scribd.com/doc/51704934/Solar-geyser http://www.singer.com.pk/catalogdetails.aspx?catname=water%20heater&id=water %20heater http://www.longquansolar.com/product.asp?catalog=1 http://www.swhmachinery.com/solar-water-heater-related-accessories/ http://cnminjia.en.made-in-china.com/product-list-1.html http://www.suntank.co.za/homeowner_technical_information.php

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